Suite Charity

[December 28th, 2005] In recent weeks, Oregon Health & Science University has deflected criticism of taxpayer subsidies for its South Waterfront development by pointing to how much free care it provides to the uninsured (see "What's Up Doc," WW, Nov. 23, 2005).

But a WW analysis of figures collected by the state of Oregon shows that OHSU, once Oregon's leader in uncompensated care, has fallen behind other hospitals when it comes to free treatments.

The state Office of Health Policy and Research collects data annually on hospitals' uncompensated care by breaking out two categories of nonpayment: "charity care" and "bad debts." Those receiving charity care are treated free of charge, while patients who at least theoretically can afford to pay—but do not—are put in the "bad debts" category.

In 1995, OHSU had one of the state's highest rates of uncompensated care (see chart above). That rate fell steadily in the late '90s; by 1998, OHSU's uncompensated care was close to the state average. But while in the past few years, uncompensated care has risen rapidly among Oregon hospitals, OHSU's uncompensated care has grown more slowly.

The analysis of the most recent uncompensated-care data shows that OHSU provides 12 percent less uncompensated care than the average for all hospitals in the state. In 2004, OHSU's uncompensated care was 4.6 percent of its gross patient revenues, while the state average was 5.2 percent. If OHSU's rate met the state average of uncompensated care, its low-income patients would have received $7 million more in free care in 2004.

The state data come from signed forms submitted by each hospital, and the info on bad debts comes from audited financial statements, according to Tina Edlund, data and research manager for the state's Health Policy and Research Office.

OHSU spokeswoman Kathleen McFall says the state data "is not reliable in this context," in part because the uncompensated-care figures aren't based on the actual financial loss by the hospital. But no matter how you parse the figures, the impact on indigent patients is real.

There are a variety of reasons why a hospital might provide less uncompensated care than it used to, or less than other hospitals. All hospitals will provide care to an individual who arrives at an emergency room with a heart attack or broken leg, regardless of their financial situation. But some hospitals may be more restrictive with non-emergency patients who have serious ailments, such as cancer, and who do not have the financial ability to pay for treatment.

"OHSU requires some patients to pay 50 percent of projected treatment costs, whether they meet charity care guidelines or not. That is different from the other hospitals," says Ellen Pinney of Oregon Health Action Campaign, a nonprofit health-access group.

OHSU is now an independent public corporation, but it started more than 100 years ago as a state-supported university. In 1973, the medical school merged with the county hospital that served as the hospital of last resort for those who couldn't afford private care.

In 1995, OHSU asked the state Legislature to allow it to become an independent nonprofit, part of its shift to a more research-focused mission. State support for OHSU overall has declined 40 percent over the past decade, and in that same period state support for hospital operations has gone from $32 million to zero, which has reduced OHSU's ability to provide free medical care.

OHSU also claims it's at a financial disadvantage because it treats a disproportionate share of Medicaid patients. Oregon Medicaid, which covers the poor, reimburses hospitals only about 70 percent of actual costs of care. Medicare, which covers the elderly, reimburses 85 percent of costs, according to the Oregon Association of Hospitals and Health Systems.

The state's latest data show that OHSU serves a disproportionate share of Medicaid clients (21 percent of its patients, vs. state average of 13 percent). But it also shows that OHSU serves significantly fewer Medicare clients (22 percent vs. state average of 37 percent). Thus, OHSU's combined financial loss for serving Medicaid and Medicare patients is close to the state average for all hospitals.

No state or federal requirements exist for how much uncompensated care a hospital must give out. Almost all Oregon hospitals, including OHSU, are nonprofits, so reducing free care for the needy is not increasing shareholder profits. But OHSU has based its ambitious expansion plan in part on generating a healthy operating profit at the hospital—and uncompensated care will not help.

Referring to those expansion plans, Pinney says "OHSU has tons of balls in the air," which she says is taking resources away from helping the needy.